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67 Cards in this Set
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Real Estate Contracts |
The legal agreements that underlie the transfer and financing of real estate, as well as the real estate brokerage business. |
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What are the most common types of contracts used in real estate? |
Listing and representation agreements |
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Contract Law |
Common law and statutory rules that govern the creation, interpretation and enforcements of contracts. |
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Contract |
An agreement between two or more parties who,have pledged to perform or refrain from performing some act. |
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What are the six elements of a valid contract? |
Competent parties Consideration Mutual agreement Lawful objective In writing and signed by the parties Contain a legal description |
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Competent party |
Addresses age, literacy, mental capacity, existence, and legal authority |
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Consideration |
The exchange of promises offered by one party to another |
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Legal benefit |
Provides something to a party that he or she was not previously entitled to |
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Legal detriment |
Something a party will do that her or she what’s not previously obligated to do |
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Liquidated damages |
Funds paid by the defaulting party or the non-defaulting party according to the term of contract |
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Mutual agreement |
Full consent of all parties to a contract |
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Offeror |
Person making the offer |
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Offeree |
The person with the ability to accept tor reject the offer |
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The Statue of Frauds in California requires? |
All agreements affecting title to or interest in real estate be in writing and signed by the parties |
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A real estate contract that transfers property or any interest in property must include? |
A legal discription |
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In contract language performance means? |
To do what one agreed to do |
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In contract language, forbearance means? |
To refrain from doing something |
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Default |
To fail to do something required by law or duty |
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Breach |
Something torn or broken, someone has broken their word |
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Express contract |
One in which all the terms and covenants of the agreement have been clearly stated and agreed to by all parties, whether verbally or in writing. |
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Implied contract |
An unstated on unintentional agreement that may be considered to exist when the actions of any of the parties suggest the existence of an agreement |
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Bilateral contract |
One in which both parties promise to perform their respective parts of an agreement in exchange for performance by the other party. |
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Unilateral contract |
Only one person is allowed to make a promise or agreement |
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To enforce a bilateral or unilateral contract in court, the following will need to be established? |
The contract existed The contract was broken A loss was suffered The person challenged was responsible |
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Executed contract |
One that has been fully performed and fulfilled, neither party bears and further obligation. |
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Executory Contract |
One in which performance is yet to be completed. |
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Executed contract |
When all of the requirements. Of an executory contract have taken place |
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All contracts should use? |
Clear and concise language |
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Indefinite contract |
One that cannot be fully understood because important terms are missing from the contract |
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Ambiguous contract |
Contains terms, but the terms are vague or can be interpreted and understood in more than one way |
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In terms of validity and enforceability, a court may construe the legal status of a contract in one of four ways. |
Valid Valid but unenforceable Void Voidable |
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Valid Contract |
One which meet the real requirements |
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Valid but not enforceable contract |
An oral long-term lease or an oral real estate sales contract |
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Void Contract |
An agreement that does not meet the tests for validity, and therefore is no contract at all |
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Voidable contract |
Initially appears to be valid, but is subject to cancellation by a party to the contract who is believed to have acted under some sort of disability |
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Unenforceable contract |
A contract that cannot be enforced in a court of law |
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Contingencies |
Conditions that must be met in order for a contract to be performed |
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It’s important agents and parties to a contractor are clear on the following components of a contingency: |
Who is required to act What should be done When it must be done How is the contingency removed or satisfied |
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What are three things that can occur when’s contingency is not met? |
Transaction is void The contingency is waved The agreement is revised |
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Under California law, all parties to a contract are required to use________________ to fulfill contingency requirements. |
Reasonable due diligence |
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Cancellation or termination of a contract may occur for? |
Performance Infeasibility Mutual agreement |
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Rescission |
Discharging a contract by mutual agreement |
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Assignment transfers? |
Rights |
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Delegation transfers? |
Duty |
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In California, the Statue of Limitations to sue for breach of contract in real estate is? |
4 years |
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Forfeiture |
The breaching party must give us something, according to the contract |
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Suit for damages |
A damaged arty may sue for money damages in civil court |
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Suit for specific peprfomance |
An attempt to force the defaulting party to comply with the terms of the contract |
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What are the two commonly used types of legal description? |
Metes and bounds Reference to a platted subdivision (lot, block, section, and subdivision name) |
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List the six elements of a valid contract. |
Competent parties Consideration Mutual agreement Law for objective In writing and sighted by the the parties Contain legal description |
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If deliberate deception, fraud, or false information is present, the agreement is what? |
Not forceable |
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Explain performance an forbearance in contracts. |
Performance means to do one agreed to. Forbearance is to refrain from doing something. Contracts may include both. |
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What is needed establish the existence of an implied contract? |
It is necessary to show an unambiguous acceptance, mutual intent to be bound and consideration. But these components do not need to be in writing or oral, they can be the actions of the parties |
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In the simplest terms, unilateral contracts involve what? |
An action undertaken by one person or group alone |
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Are options always unilateral or bilateral contracts? |
Unilateral |
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Explain Executory contract and give one example. |
one in which performance is yet to be explained. A sales contract prior to closing is a example. |
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When all the requirements of an executory contract have take place, the contract becomes what? |
An executed contract |
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How can contract interpretation issues be avoided? |
They should always be in writing, terms and phrases that could have ore than one meaning should be clearly defined, and parties to a contract should review the contract closely before signing. |
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Real estate contract aren’t enforceable unless the parties have exchanged something of value. This value is called? |
Consideration |
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A voidable contract is one which initially appears to be valid, but is subject to what? |
Cancellation by a party of the contract who is believed to have acted under some kind of disability. |
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What must parties to a contract do when a contingency is removed or satisfied? |
The parties are required to perform according to the contract terms or be in breach of contract |
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A contract terminates when fully executed by the parties. This is called a what? |
Performance |
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Parties to a contract can agree to terminate, or renounce, the contract. What is the term for this action? |
Mutual agreement |
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A real estate contract that is not a personal contract for services can be assigned to another party unless the terms of the agreement specifically prohibit assignment. Sals contract are assignable because they involve the purchase of real property rather than personal service. |
Explanation of assignment of a contract |
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If an assignor does not receiver an novation, release from liability. What does this mean in regards to his or her obligations to a contract? |
Unless the assignor receives a complete release for liability (a novation), the assignor would be, Secondarily liable of the assignee did not perform according to the contract terms. |
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What is tort? |
A civil wrong or wrongful act, whether intentional or accidental, that the law recognizes as grounds for a lawsuit. |
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What are the common tort claims made against real estate licenses? |
Fraud Breach of duty Breach of contract Negligence Bodily injury/ property damage Misrepresentation regarding condition of the property Consumer protection act Earnest/Escrow Money Dispute Misrepresentation regarding flooding or leaks Misrepresentation regarding the value of the property |
